How Google Could Transform the $20 Billion Local Television Market

Your phone knows where you live, but your TV has no idea. Most of the ads played on television are the same whether you live in Mississippi or New York. The exception is local ads, but even those are a blunt instrument that ignore the more complex concepts of audience that have become commonplace in digital media.

But with little fanfare earlier this week, Google made some overtures to the $20 billion local TV market that may bring it into the modern age.  The search giant this week announced that local TV ads shown to Google Fiber subscribers in Kansas City, Kansas, and Kansas City, Missouri, will see ads that are delivered in real-time and can be served up based on geography, the type of program being shown or viewing history, though viewers can opt out of the latter.

“If you’re a local business in Kansas City, just as with digital ads, you’ll only pay for ads that have been shown, and can limit the number of times an ad is shown to a given TV,” Google wrote in the post. In other words, television ads on Google Fiber will function much like they do on the Internet.

For longtime industry watchers, this idea isn’t necessarily new. Addressable advertising is available in roughly 50 million U.S. households. Addressable advertising makes sense for a national brand such as Allstate, which used addressable for a campaign for renter’s insurance – a product for which a national buy would be wasteful.

For local advertisers, however, Google’s vision for Fiber is more intriguing. This is essentially a Google display ad that is rendered on people’s TV screens.

But it’s not just what’s happening with television providers that is opening the door for the local TV market.  The rapid decline in price of video production equipment means that small marketers can produce a video ad with as little as their iPhone, using off the shelf software. To boot, most local television ad are reasonably priced— even during the Super Bowl.

Ideally, advertisers who are trying to reach consumers in Google Fiber markets will be able to use TV to augment a search buy. Google spent over half a decade trying to build TV into ad buys before dropping similar efforts with print and radio advertising. Google never got enough inventory to shake up the TV ad business.

Unless Google Fiber becomes much more ubiquitous – it’s only in a handful of cities now, though the number is expanding – then Google’s TV ad business will remain small for the foreseeable future. But for advertisers in Kansas City, it will be interesting to see how well the ads work and whether Google’s only-pay-if-shown provision makes a difference.

As the television market opens up, expect a flurry of new innovations. What else?  I hear Microsoft is looking into ways to employ its Kinect motion detector to figure out who is actually in the room when an ad is shown.

Todd Wasserman is a freelance writer based in New York. Previously, he was the business editor for Mashable and the editor-in-chief of Brandweek.